Minimum Credit Score required to get a Credit card in UAE
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Everyone who’s a tad bit familiar with the world of finance knows how a credit card works and how it affects their credit history. One thing that’s important to getting a credit card in the UAE is your credit score. This is an important financial number to get any kind of credit, be it loans or credit cards. This article is dedicated to uncovering credit scores you would need to get a credit card of your liking. We have compiled all important things related to credit cards based on credit scores, check credit score for credit card in UAE.
What is a Credit Score?
Credit score in UAE is a number allotted to everyone who participates in financial transactions. This number is to determine the creditworthiness of a borrower and it ranges between 300 and 900. The credit score of an individual is a reflection of their creditworthiness and repayment capacity when it comes to borrowing. A good credit score means you are a financially responsible person and take repayments very seriously. A poor credit score for credit card shows that you are not only careless with borrowed money but may have missed out on paying your monthly bills as well. Credit score UAE also takes on normal obligations like paying utility bills. Skipping or missing out on any kinds of payments can also affect your credit score negatively.
How are Credit Scores Determined?
Determining credit score of an individual is based on an algorithmic calculation of their income, expenditure, lending and repayment history. Bill payments, credit history and several other lesser-known factors go into finalising this three-digit number. AECB, the organisation responsible to calculate credit scores in UAE may consider a combination of 4-5 different factors when deciding the credit score of a person. Given below is a brief description of the same:
Bill Payment History: It is one of the important factors considered for determining your credit score. This not only includes any active credit cards you may have but also things like utility bill payments, phone bills etc. Bill payments get up to 35% of weightage when it comes to determining the credit score of an individual. It is the biggest deciding factor and this is why it is important to pay your bills on time.
Debt Level: The debt level is considered as per the credit card debt you have at the moment. Debt level examines the difference between the credit card limit and the exhausted balance on the card. Your debt level makes up to 30% of the credit score UAE weightage. A healthy credit usage percentage can be scored between 15% to 30%. Utilising your credit card any less or more than the prescribed limit can impact your credit score negatively.
Credit History: A long history of holding and managing credit tools like credit cards and loans is also considered when credit scores UAE are calculated. This particular factor holds up to 15% of weightage. People who have held and managed their credit tools adequately fare well in this category. In addition to your credit tools, other banking products, like bank accounts, are also considered a part of your credit history.
Diversity of Credit Accounts: Diversity pays off. The types of credit accounts you have and the way you manage them make up 10% of the weightage for your credit score. There are two types of credit accounts in the UAE – revolving accounts and instalment loans. Revolving accounts come without a maturity date and a maximum credit limit. Instalment loans come with a maximum credit limit, a maturity date and a fixed repayment method. Managing these accounts well can help you score well in this section.
Credit Enquiries: The final 10% of the weightage is dedicated to the number of credit enquiries made for your account. Every time you send in an application form for a credit card or a loan, the financial institution draws up your credit score UAE. The more your credit scores have been accessed by the banks, the lower it drops. So, make sure that you only check your credit score for credit card once every few months to track it and only send in applications after researching properly.
How to Check My Credit Score in the UAE?
Checking credit scores in the UAE is pretty simple. You can either check it on the official website and offline platforms provided by AECB, Al Etihad Credit Bureau, the institution responsible to calculate the credit scores in the UAE. Following are all the ways you can run a credit score check in the UAE:
AECB Website and App: You can either go to the official AECB website or download the mobile application for the same. A small fee of AED 10.5 is applicable to check your credit score via the AECB website or application. You can easily get your credit report with your credit report as well. AED 84 is the fee for getting the credit report and the credit score.
AECB Offices: You can also head to an offline office of AECB and ask how can I check my credit score. The fee to get a credit score check offline is AED 21 and the fee for a credit score check and credit report check is AED 105.
Policybazaar UAE Website: You can also run a credit score check on Policybazaar.ae when you apply for your new credit card or personal loan. credit score check on our website is free as we take care of the AECB credit score check fee. The credit scores provided are taken from AECB itself. You automatically get a free credit score check when you send in your application form for credit cards and loans. The report is sent to your official email address.
What Credit Score Do I Need to Get a Credit Card?
Credit scores are divided into five different ranges or categories in the UAE – very low, low, medium, high and very high range. Each range is given stars starting from 1 to 5. Given below is the list of ranges for each of these categories:
Very Low Credit Score: 300 to 540
Low Credit Score: 541 to 650
Medium Credit Score: 651 to 710
High Credit Score: 711 to 745
Very High Credit Score: Above 746
Credit Cards Based on Credit Scores
Getting a credit card based on your credit is all about determining which range your credit score belongs to and then getting a list of the credit cards that can be arranged with your credit score. Now, a credit score is not the only eligibility criteria you will have to clear. Minimum income and age are also applicable to most credit cards based on credit scores available in the UAE. Note that credit cards in the UAE are not pre-divided into different categories based on credit score. However, we have attempted to explain the credit cards for each of the categories:
Credit Cards for High and Very High Range Credit Score
With credit scores this high, you can basically get any credit card you want in the UAE, as long as you satisfy the minimum income requirements. Some credit cards may be available only on a preferential basis. For example, cards that come with opening premium bank accounts or wealth management accounts. These credit cards may still be out of reach for most people unless they are eligible for them. However, apart from that, you can any other credit card based on the credit score you have.
Credit Cards for Good Credit Score
Most special benefit credit cards can be taken by people with medium to high credit scores. Getting any basic or special benefit on credit score for credit card is easy when you have at least a medium credit score UAE. Now, just because you can get most credit cards you qualify for, doesn’t mean you should start blindly applying for them all. Every time a credit score check is run by banks to verify details on your credit card application, it drops further down. So, make sure that you only send in applications only for one or two top credit cards of your choice. Run a thorough check, compare benefits and see which one fits your needs the best.
Credit Cards for Low Credit Score
Getting a credit card based on your credit score UAE is quite difficult when your credit score falls into the low or very low category. Most banks offer secured credit cards to people with a low and very low credit scores. Taking out a secure credit card can be a pretty good thing for your low credit score. A secured card can be used to bump up your credit score to the medium category at the least. Once your credit score is medium aka a 3-star category credit score, you can close your secured credit card and move to a more flexible, unsecured option. Some banks may also offer unsecured credit cards for people with low credit scores UAE. However, you may have to check the availability of such cards with your bank.
Can I Get a Credit Card Even Without a Credit History?
There will be a time in everyone’s life when they did not have a credit card. However, this does not mean that you cannot get a credit card at all. If you are starting early consider getting a beginner credit card with useful value-added benefits like cashback offers. Cashback offers credit cards are available to almost everyone, irrespective of their credit scores. If you have been regular with your payments and you haven’t defaulted on anyone of them then your credit score should be somewhere in the medium, 3-star range. Individuals in this range can easily get cashback or a rewards credit card. If your credit score is in the low or very low range, you may face some trouble getting a generic credit card. In this case, you can go for secured credit cards and invest in some time to build your credit score UAE. In short, you can easily get a credit card even if you have no credit history with credit tools.
Factors That Can Influence Your Credit Card Application
Apart from your credit score for credit card in UAE, few other factors can influence your credit card application. Even if the credit score UAE influences almost all credit tools, several other factors may lead to a rejected credit card application. If one or more of these factors come into play, your application may get denied even if you have a good credit score. Given below are the top factors that will prove influential when you apply for a credit card in the UAE:
Your Income: If your monthly salary is AED 10,000 and you apply for a credit card which comes with AED 40,000 annual fee, your application will get denied. The reason is simple – you are not eligible for the credit you have applied for. Most credit cards come with a list of eligibility criteria of which income is a part. Check the eligibility rules before you apply for a credit card and figure out whether you can apply for a certain credit card.
Other Credit Tools: The other credit cards you own or the other loans you may still have active on your name will also affect the new credit card application you submit. The current level of debt on your shoulders will influence any other credit tool you are planning to take. Having a lot of other active credit tools, your credit card application may get denied.
Occupation: Certain occupations are considered more favourable than others by banks. People with stable job that pays well are considered top contenders for credit tools, whether credit cards or loans. Some banks also give preference to applicants with more preferable jobs. In the same way, some occupations may also be considered unfavourable and may end up having your credit card application denied.
Errors in Application Form: While this may sound like a very basic reason, making errors in your application form may lead to rejected credit card application. Make sure that all basic but important information is correct and clearly mentioned on your application form.
Verification: Your application form is not the only reason for the application to get rejected. If your background check is not successful, the bank can choose to reject your credit card application right away. The bank may choose to talk to your employer to run a check on your employment or get verification from your landlord. If any of the supplied information is found to be untrue, your credit card application may get denied.
Pre-Existing Credit Cards: The final reason on this list is your pre-existing credit cards. If you have multiple credit cards already, your application for a new one may get denied. Having a diverse set of credit tools is good for your credit score UAE but you should avoid having too many credit cards.
How Can I Improve My Credit Score?
If you have a low range credit score, getting credit cards based on credit score becomes rather hard. However, you can easily improve your credit score by taking care of a few simple steps. Given below are some of the things you can do to make sure that your credit score rises to a moderate or yet better, high or very high range:
Pay Bills on Time: The best you can do for your credit score UAE is to pay your bills on time – all kinds of bills. Never miss deadlines to pay off your utility bills or phone bills. Also, keep close tabs on your credit repayment dates and make sure you send in the money before the maturity date arrives. Since bill payment makes up 35% of the credit score UAE calculation weightage, it can be very helpful.
Diversify Your Credit Portfolio: If you can, try out different kinds of credit tools. If you have a big purchase coming up, consider breaking it into small equal monthly payments. Try credit cards with revolving credit as well as instalment credit options. Make sure that your credit profile reflects that you are capable of managing all kinds of credit tools.
Don’t Send Too Many Credit Card Applications: If you apply for every credit card you come across, your credit score UAE will drop even further. The banks have to pull out your credit score every time you send a new application. the more your credit score UAE has been checked by banks, the lower it falls. Take your time and choose one or two credit cards you like the best, and make sure you are eligible for these credit cards. Only apply for a new credit card when you have closed your previous one, with a good reason too. You can have more than one credit card but make sure you do not go overboard.
Make a Monthly Budget: Making a monthly budget can help you keep track of your finances as well as your payments. Keeping a track of your bills is a great way to make sure you always pay them on time. Moreover, you are less likely to default payments when you set money aside for your bills at the beginning of every month.
Spend Wisely: When it comes to credit card limits, there is a trick to make sure that you always only spend a favourable amount, no less, no more. Exhausting your credit card limit is never good. Make sure you only utilise 15% to 30% of your credit limit. Spending any more than 30% of your credit card limit can be harmful to your credit score UAE. Make sure you control your expenses and spend wisely.
In a Nutshell
With the availability of online platforms, getting a credit card is a matter of a few clicks. But having a good credit score for credit card in UAE is still extremely important. The safest way to make sure that you can always get credit cards based on credit scores is to maintain at least a medium level credit score in the UAE. Pay your bills on time, keep up with your credit repayments and take all your financial responsibilities, no matter how big or small they are. You can also get in touch with our financial experts and get any kind of assistance you need in getting a new credit card. Policybazaar.ae is just a few taps away.
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